Have Investors Priced In DPA Group NV.'s (AMS:DPA) Growth?

DPA Group NV. (ENXTAM:DPA), a professional services company based in Netherlands, saw a double-digit share price rise of over 10% in the past couple of months on the ENXTAM. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at DPA Group’s outlook and value based on the most recent financial data to see if the opportunity still exists. See our latest analysis for DPA Group

What is DPA Group worth?

The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that DPA Group’s ratio of 15.74x is trading slightly below its industry peers’ ratio of 17.84x, which means if you buy DPA Group today, you’d be paying a reasonable price for it. And if you believe DPA Group should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, it seems like DPA Group’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will DPA Group generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. DPA Group’s revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? DPA’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at DPA? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on DPA, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for DPA, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on DPA Group. You can find everything you need to know about DPA Group in the latest infographic research report. If you are no longer interested in DPA Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.